Indian company Ocior is developing renewable hydrogen and ammonia projects in India and Egypt. Its most advanced project in Odisha, India, will be developed in two phases — 200,000 t/yr in the first and 800,000 t/yr in the second — with plans to take a final investment decision (FID) for the first phase by September. Argus spoke with the firm's founder and chief executive, Ranjit Gupta, about India's regulatory framework for green hydrogen and progress of the company's projects. Edited highlights follow:
How is India faring in development of the hydrogen sector?
India is actually doing a very good job by creating a market for 200,000t/yr of green hydrogen use in refineries. The central government has allocated this capacity across various refineries, which are coming up with individual tenders for hydrogen plants to be put up at or around them.
One tender by [state-owned refiner] IOC is already closed and other tenders are expected to close in March and April. Once a price for green hydrogen is discovered through these tenders, it will really help the industry move forward.
If the government is able to demonstrate that there is offtake available, there will be no dearth of investments in this sector.
What more can the government do on the regulatory side?
There are a lot of things that the government could potentially do. The objective is to get green hydrogen and green ammonia costs as low as possible. And you do that by at least bringing it down on par with current grey hydrogen and ammonia prices.
Both grey hydrogen and ammonia are produced from natural gas. India imports most of its natural gas, and all of it is denominated in dollars.
But the refineries and [state-owned] SECI [Solar Energy Corporation of India] are giving us rupee pricing. We have requested dollar pricing—that could help us drive the cost of debt down. If you have a dollar offtake, you can go for a dollar debt, which means you don't have to hedge the dollar to rupee.
Another thing, when setting up a green hydrogen and green ammonia project, it should be recognised that we are replacing imported goods. Therefore, the industry should receive benefits that help reduce taxes. If I can reduce my taxes and cost of debt, that will really help in reducing my capital expenditure number, ultimately bringing down the cost of hydrogen and ammonia.
Earlier, selling renewable energy from one special economic (SEZ) zone to another was not allowed, but the government has fixed that. But selling renewable energy from an export-oriented unit to an SEZ is still not allowed. The ministry of new and renewable energy (MNRE) has been trying for last two years to get it changed at the behest of the industry.
Additionally, you cannot sell excess energy outside the SEZ. That needs to change. The regulator could define taxes I have saved and determine a tariff adjustment if I sell excess renewable energy to the domestic tariff area.
There are several small things like this which we are requesting the government to do. And MNRE has done a fabulous job in trying to get these things done. But when it becomes inter-ministerial, the process is drawn out a little longer.
How are your projects progressing?
We have two projects — in Egypt and Odisha, India. We hope to FID the first phase of the Odisha project by September, and the Egypt project by March next year. But further progress will depend on offtake.
For our Odisha project, we have acquired land and started front end engineering design (FEED) study. We have contracted Norwegian company Aker solutions to work on the FEED study. We have awarded ammonia licensor contract to [US engineering firm] KBR and green certification study to [German certification provider] TUV Rheinland.
We have already completed geotechnical studies. We are in discussions with GRIDCO [Grid Corporation of Odisha] for renewable power.
So, a lot of progress has been made. The issue is offtake. If we are able to determine that, then we could potentially start construction of the project by August- September. We have signed a memorandum of understanding with an European trader, Ameropa, and are in discussions with other Japanese and European companies for offtake. Plus, we are going to take part in the SECI's green ammonia tender.
Are you facing any challenges in developing the project in Egypt?
Every country is different. In Egypt, the big advantage is that solar and wind resource are fantastic, much better than India. No issue with land availability — we have been allocated 600 km² of land for the wind project and around 11,000 acres for solar projects by the Egyptian authorities. That's a big advantage over India, where land is always a challenge to aggregate. On the regulatory framework, both countries are similar. The disadvantage of Egypt is that they don't have a good electricity grid.
India has great infrastructure for project development and construction. And you will not have a problem with labor or skilled engineers. Egypt might not have that available.
So, there are advantages and disadvantages to each country.
How much does compliance with EU standards on renewable fuels of non-biological origins impact production costs?
The biggest issue is temporal correlation. If they could do away with it, that would make things easier. In dollar terms, the difference in production costs would be close to about 10pc for the price of ammonia. The EU green lobby needs to realise that the more stringent they make green standards, the further away the pricing will be from grey hydrogen, making it more difficult for consumers to accept green hydrogen. This will also leave the doors open for blue hydrogen, which will come in somewhere in the middle. By starting with less restrictive covenants, not compromising on carbon content, green hydrogen pricing can be more competitive than blue hydrogen for EU.
